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Posted on Thursday, 27 May 2010 14:12

This month... Mining

Each month we focus the spotlight on the latest sector or banking region, accompanied by an interactive list of Africa's top players drawn from our two annual rankings, the Top 500 Companies and Top 200 Banks in Africa. We're also highlighting related articles from our free Archive. 

This month we are focusing on Africa's miners, who are benefiting from the booms and busts in international ore prices. 

 

Everything depends upon individual commodity prices in the mining sector. During the economic downturn, the prices of minerals such as diamonds collapsed – taking with them the performance of top African mining companies like De Beers – while gold and platinum miners have been riding a wave of ever-higher prices into 2010.

 

Phosphate miners in Togo. Photo: Vincent Fournier/JAGold prices rose by 25% in 2009, while platinum prices increased 59% after a steep decline in 2008. Copper, which was trading at $3.15/lb in 2008, struggled to break through the $2 mark in late 2009. By mid-2010, copper futures were selling for more than $3/lb. Although some ore prices have made rebounds in 2010, the Eurozone crisis and warnings of a cooling Chinese economy are causes for concern.

 

Many African copper producers are diversified multinational companies that can minimise risk from swings in single sectors. India’s Vedanta Resources was one of many companies in the Zambian copperbelt that reduced production in 2009 to limit losses due to lower prices. Its $1.3bn revenue for the third quarter of the 2008/09 financial year was down 31% compared with the previous quarter. Its Zambia operations produced only 25,000tn of copper cathode, compared with 38,000tn in the second quarter. In order to increase its diversification, Vedanta spent $1.3bn in May 2010 to buy Anglo American's zinc mines in Namibia, South Africa and Ireland.

 

As international financial concerns pushed more money into gold – demonstrated by recent purchasing behaviour by India and China – gold miners across the continent have poured more money into expanded production. South Africa’s Gold Fields, the world’s fourth-largest gold company, increased its production by 15% over three quarters of the 2009 financial year to 906,000 ounces. In the year ending June 2009, Gold Fields’s revenues increased by 26% to R29.1bn ($3.9bn) from R23bn in 2008, leading to an increase in operating profit of R2.5bn. A group of nine banks are backing the company's expansion plans and extended a three-year, $450m credit line in late May 2010.

 

In December 2009, De Beers, which has consistently appeared in the highest ranks of our Top 500 African companies, was left asking its three biggest investors – Anglo American, the government of Botswana and the Oppenheimer family – for a $1bn bailout. Net debt rose to $3.3bn in mid-2009 on the back of capital spending on new investments in Canada and cash-flow problems which have led to more bank borrowing. The bailout enabled De Beers to renew its $3bn credit facility and avoid much more serious problems. After shutting down several of its African operations in early 2009, De Beers still had negative cash flows of $100m for the first half of the year. In May 2010, De Beers shareholders were quietly discussing the possibility of listing on the stock market in 2011.

 

De Beers managers decided on a new strategy to cope with the global downturn in 2010. The company is ramping up production in the short term: in the first quarter of 2010, De Beers mined 7m carats of diamonds, compared to 1m for the same period in 2009. However, the diamond miner's medium-term strategy is to reduce production as there have been no large discoveries to boost the company's reserves. De Beers said in April that it would cut production levels to 40m carats in 2011, down from 48m in 2008.

 

As a result of price swings, South Africa’s platinum producers returned dire results in 2009 and big earning turn-arounds in 2010. In August 2009, Anglo Platinum’s headline earnings were down 95% and Impala Platinum’s (Implats) decreased by more than 50%. Not only had Implats’s costs risen, but production from new projects was lower than expected and overall production has been stagnant, at 1.26m oz over the last nine months.

 

Financial bosses have had to cut R10bn from the capital expenditure programme through to 2013. However, things were looking up in May 2010 when top platinum producer Anglo Platinum announced that earning per share would increase by 20% year-on-year by June due to strong platinum prices.

 

MINING RANKING

A list of Africa'as biggest miners, taken from our interactive annual list of Africa's Top 500 companies, published in the February-March 2010 edition of The Africa Report.

 

 

Rank 09

The Afrique report
TOP 500 companies the africa report
Rank 08

TOP 500 companies
The Afrique report
Company name


Country


Sector


TOP 500 companies egypt
Turnover (Thds $)

TOP 500 companies tunisia
Turnover change

Net profits


6 45 OFFICE CHÉRIFIEN DES PHOSPHATESMOROCCO MINING 7492116.62 157.78% 2916916.12
7 12 DE BEERS CONSOLIDATED MINESSOUTH AFRICA MINING 6888000 0.76% 279000
13 11 ANGLO PLATINUM CORP.SOUTH AFRICA MINING 5363322.25 -22.86% 1505195.55
25 21 IMPALA PLATINUM HOLDINGSSOUTH AFRICA MINING 3974447.35 -14.73% 1859017.4
36 30 ANGLOGOLD ASHANTISOUTH AFRICA MINING 3145623.1 -12.86% -1701493.25
38 42 DEBSWANA DIAMOND CO.*BOTSWANA MINING 2966760 - 0
46 44 GOLD FIELDSSOUTH AFRICA MINING 2430953.68 -16.62% 470934.88
54 69 KUMBA RESOURCESSOUTH AFRICA MINING 2256684 32.58% 761525.2
56 61 LONMINSOUTH AFRICA MINING 2231000 14.94% 566000
84 - EXXARO RESOURCESSOUTH AFRICA MINING 1462512.95 - 359738.25
87 125 AFRICAN RAINBOW MINERALSSOUTH AFRICA MINING 1364892.35 46.15% 522650.55
88 95 COMPAGNIE MINIÈRE DE L'OGOOUÉGABON MINING 1338795 9.63% 378585
91 90 ENDIAMAANGOLA MINING 1300000 - 0
113 113 KONKOLA COPPER MINES*ZAMBIA MINING 1017206 - 301329
117 86 HARMONY GOLD MINING CO.SOUTH AFRICA MINING 973036.5 -28.16% -25884.25
119 178 ASSORESOUTH AFRICA MINING 967641.69 52.24% 324295
140 198 SOC. NAT. INDUSTRIELLE ET MINIÈREMAURITANIA MINING 838000 50.45% 321000
167 165 NAMDEB DIAMOND CORP.*NAMIBIA MINING 683205.12 - 21415.68
201 - TARKWA MINESGHANA MINING 550302 - 82228
220 126 PALABORA MINING CO.SOUTH AFRICA MINING 486473.88 -46.81% 76019.3
248 199 NORTHAM PLATINUMSOUTH AFRICA MINING 410570.37 -25.85% 630861.93
256 333 SOC. D'EXPL. DES MIN. D'OR DE SADIOLAMALI MINING 396208 47.89% 79734
275 290 SOCIÉTÉ DES MINES DE MORILAMALI MINING 370586 16.09% 117129
326 358 MERAFE RESOURCESSOUTH AFRICA MINING 293844.77 19.87% 108575.55
356 321 GROUPE MANAGEMMOROCCO MINING 260409.57 -9.95% 0
359 349 METOREXSOUTH AFRICA MINING 257629.53 2.14% 58588.42
361 - INDUSTRIES CHIMIQUES DU SÉNÉGALSENEGAL MINING 257162.21 - 0
404 - SOCIÉTÉ DES MINESDE L'AÏRNIGER MINING 224406.5 - 0
426 287 DRDGOLDSOUTH AFRICA MINING 204236.98 -37.57% 105231.73
460 - EL NASR MINING CO.EGYPT MINING 175387.5 - 83401.98
467 - DAMANG MINESGHANA MINING 172196 - 15725
2008 RESULTS IN THOUSANDS OF DOLLARS - *IN ITALICS 2007 RESULTS - ND: NO DATA

 

A version of this article was originally published in the February-March 2010 edition of The Africa Report. 

 



Gemma Ware

Gemma Ware

Gemma Ware is business editor of The Africa Report magazine, where she has worked since 2008. She coordinates the magazine's business pages and writes on a range of subjects from the continent's telecoms revolution, to private equity and African stock markets.

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